Reviewing LexinFintech (NASDAQ:LX) and OneMain (NYSE:OMF)

OneMain (NYSE:OMF) and LexinFintech (NASDAQ:LX) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.

Dividends

OneMain pays an annual dividend of $4.20 per share and has a dividend yield of 6.5%. LexinFintech pays an annual dividend of $0.31 per share and has a dividend yield of 9.6%. OneMain pays out 71.2% of its earnings in the form of a dividend. LexinFintech pays out 21.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. OneMain has raised its dividend for 5 consecutive years. LexinFintech is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for OneMain and LexinFintech, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OneMain	0	4	7	1	2.75
LexinFintech	0	2	0	0	2.00

OneMain currently has a consensus target price of $62.63, indicating a potential downside of 3.52%. LexinFintech has a consensus target price of $3.50, indicating a potential upside of 8.02%. Given LexinFintech’s higher probable upside, analysts plainly believe LexinFintech is more favorable than OneMain.

Profitability

This table compares OneMain and LexinFintech’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OneMain	13.15%	22.70%	2.83%
LexinFintech	13.28%	16.11%	8.09%

Institutional and Insider Ownership

85.8% of OneMain shares are held by institutional investors. 0.4% of OneMain shares are held by company insiders. Comparatively, 27.8% of LexinFintech shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

OneMain has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500. Comparatively, LexinFintech has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Valuation and Earnings

This table compares OneMain and LexinFintech”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OneMain	$4.99 billion	1.53	$509.00 million	$5.90	11.00
LexinFintech	$1.95 billion	0.28	$150.76 million	$1.42	2.28

OneMain has higher revenue and earnings than LexinFintech. LexinFintech is trading at a lower price-to-earnings ratio than OneMain, indicating that it is currently the more affordable of the two stocks.

Summary

OneMain beats LexinFintech on 12 of the 18 factors compared between the two stocks.

About OneMain

OneMain Holdings, Inc., a financial service holding company, engages in the consumer finance and insurance businesses in the United States. It originates, underwrites, and services personal loans secured by automobiles, other titled collateral, or unsecured. The company also offers credit cards; optional credit insurance products, including life, disability, and involuntary unemployment insurance; optional non-credit insurance; guaranteed asset protection coverage as a waiver product or insurance; and membership plans. It sells its products through its website. The company was formerly known as Springleaf Holdings, Inc. and changed its name to OneMain Holdings, Inc. in November 2015. OneMain Holdings, Inc. was founded in 1912 and is based in Evansville, Indiana.

About LexinFintech

LexinFintech Holdings Ltd., through its subsidiaries, provides online consumer finance services in the People's Republic of China. The company operates Fenqile.com, an online consumption and consumer finance platform that offers installment purchase and personal installment loans, as well as online direct sales with installment payment terms; and Le Hua Card, a scenario-based lending. It also provides technology-driven platform services for financial institution customers and partners to increase revenues, manage financial risks, enhance operating efficiency and service quality, enhance collections, and reduce overall costs; Maiya application, a location-based services shopping experience with buy-now and pay-later options; and Juzi Licai, an online investment platform. In addition, the company offers technical support and consulting, software development, financing guarantee, and financial technology services. The company was formerly known as Staging Finance Holding Ltd. and changed its name to LexinFintech Holdings Ltd. in March 2017. LexinFintech Holdings Ltd. was founded in 2013 and is headquartered in Shenzhen, the People's Republic of China.